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Flat agreements under RERA should disclose the completion date of the project

Friday, November 24, 2017

By Ramesh S. Prabhu

Q.If the Promoter commits any breach after receipt of OC, can he be tried under Real Estate (Regulation and Development) Act, 2016 (RERA)? If not, what is the remedy for a flat buyer who is otherwise covered under MOFA? There might be umpteen number of such cases where gullible buyers suffer due to various breaches committed by developers in redeveloped buildings where OC is already provided.
A.They have to file case in appropriate courts under the provisions of MOFA only, as buildings that have received OC prior to 1st May 2017 are considered as completed projects under RERA. RERA is applicable prospectively with an exception of ongoing projects where there is no OC.

Q.Project passed under SRA. No flats till date constructed. Booking started in full swing. No permission taken from RERA Authorities. Can a project under SRA be allowed to sell flats when the promised flats are not handed over to SRA?
A.Under MOFA, 1963 , unless and until, commencement certificate is received for a project / building, flats cannot be sold. Further under SRA, commencement certificate for sale building is granted in proportion to the construction of rehab building done by the developer. In other words, if two floors of Rehab building is constructed say about 1000 Sq. Meters constructed for slum dwellers , the Developer also will be granted commencement certificate to construct 1000 sq. meters or equivalent incentive FSI for constructing the sale building to finance the SRA scheme. In the present case, both the provision of MOFA and SRA are violated by the developer. Under RERA, unless the plan for the sale building is approved by SRA, the real estate project cannot be registered and thus sales cannot be effected. Under the given circumstances, the aggrieved party may file a complaint before the RERA authority and Authority may initiate necessary action for such violation including filing a criminal case against the promoter.

Q.During the registration we put possession date as 2022 December to be on safe side. Similarly, in RERA agreement for sale, we put actual completion date with a buffer period lets say December 2019. Firstly is it acceptable? Secondly, the 1 year grace period as mentioned in the act is on the registration date or the agreement date ?
A.The disclosure made before the RERA at the time of registration of real estate project and in the agreement for sale executed with the buyers cannot be different. Flat agreements under RERA should disclose the completion date of the project and date of the possession of the flat. It has to be executed as per RERA Rules model form. of agreement and what has been given in affidavit in Form B. There is no grace period of 1 year provided in the Act for delay in possession. Section 6 provides that Authority may on application made by the promoter consider extension of registration maximum for period of 1 year. This is completely at the discretion of the Authority.

Q.Whether carpet area mentioned in RERA Act can be challenged as it involves thickness of walls (internal walls)? Since this will increase the stamp duty liability on flat purchasers. The carpet area defined is not as per DC regulations, and National Building Code.
A.Real Estate is governed by many central and state laws. Any provision in other laws which are not inconsistent with RERA shall continue to operate as per section 88 of the RERA, 2016. And if there are any contrary provision or inconsistent provision, the provision of RERA will be applicable. This is provided as an over riding effect of other laws in section 89 of RERA, which is reproduced here under;

Chapter X – MISCELLANEOUS 89 Act to have overriding effect. The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force."

There will be marginal effect or increase in the levy of stamp duty as the definition of carpet area does not include partition walls as per Development control rules. Now, when the new plans are submitted for approval, carpet area by including partition walls need to provided. The partition walls certainly do not include the beam and column inside the flats as they are of structural nature.

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